On The Money Grain Commentary 9-29-22

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Corn Outlook:

The grains, and commodities in general, are being influenced by geopolitical factors, a soaring dollar, plus concerns about a slowing economy. Aggression by Russia in Ukraine continues, the dollar is at its highest mark since May 2002, inflation stands at 8.3 percent, and the value of a 401k has declined nearly 21 percent since January. These issues have unnerved investors causing them to flock to cash. Meanwhile, the slowdown in the global economy can be seen from sluggish exports. Last week, export inspections for corn were only 18.0 MB, and must average 46.0 MB on a weekly basis to reach USDA’s target of 2.275 BB. With a record crop forecast in South America, their projection is probably a bit high unless there is a sharp break in the dollar. Meanwhile, harvest is in full swing at 12 percent complete, slightly below the average of 14 percent.

Bean Outlook:

U.S. ending stocks of soybeans are their tightest since 2015, but global stocks are on the rise. China’s economy is weak because of Covid restrictions which will impact their imports. Last week, export inspections were a marketing year low at 9.4 MB. Usually, exports are their strongest at the beginning of harvest, but, this year, they are the slowest since 2015. Currently, weather is favorable in South America with Brazil forecast to produce a record crop, and Argentina their fourth largest. All these factors will tend to weigh on values. Meanwhile, harvest is just getting underway in the Midwest and is 8 percent complete, running behind the average of 13 percent.

Wheat Outlook:

Exports in wheat have been improving since July and are on track to reach USDA’s projection of 825 MB. Last week, inspections were 19.1 MB. However, the question is whether the boost in exports will last, as the dollar is at a 20-year high, and Russia is forecast to produce a record crop. Although global stocks have declined since 2019, there is certainly no shortage. In other developments, winter wheat planting is coasting along at 31 percent complete compared to the average of 30 percent.

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